Interest Component – Section 24 B – Rs 2 lakhs

1) Calculation: Total Interest component paid in 1 year, subject to a maximum of Rs 2 lakhs, is deducted from your TAXABLE INCOME

2) Basis of Tax Deduction: On Accrual Basis

3) Income Tax Benefits can be claimed only after the completion of the project. However, after the possession you can claim for the already paid interest component during the construction phase in 5 equal installments i.e. from Year 1 of possession till Year 5 of possession. This claim is over and above your regular claim for interest outgo after possession subject to a maximum of Rs 2 lakhs

Interest Component – Section 80EE – Rs 50,000

This deduction of Rs 50,000 under Section 80EE is over and above the Rs 2 lakhs allowed under section 24 B. First you need to exhaust the limit of Rs 2 lakhs under Section 24 and then claim the additional benefit under this section

The following are the applicable conditions

1) Applicable for only 1st time individual home buyers. If you are a company/HUF its not applicable

2) A loan must have been taken from a Bank/HFC to buy this 1st property of yours

Tax Benefits for Joint Ownership

Tax benefits on a joint home loan are available to all the joint owners

1) Ownership in the property is a must

2) All joint owners must be co-borrowers in the loan

3) Advisable to have an ownership agreement in place as a legal proof clearly defining the ratio of ownership

4) Benefits: Each owner can claim the permissible deductions separately for the same property

5) Calculations:

If the ratio of ownership is 60%:40% in the ownership sharing agreement then the loan amount of 50 L will be split as 30 L and 20 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan.